Surveys Find VC Investments Continue Climb

Two quarterly surveys of venture capital investments were released during the past two weeks. Both report record levels of venture-backed investments for the first quarter of 2000, in spite of the jittery stock market. While the figures vary between the two surveys, both identify the same investment trends. For instance, both surveys found that among the states, Georgia, Illinois, and New York experienced the greatest growth in deals. Summaries of both reports are provided below. 

PricewaterhouseCoopers Moneytree™ Survey 

Venture-backed investments in the first quarter of 2000 reached $17.2 billion, surpassing previous quarterly records by $2.6 billion, according to the latest Moneytree™ survey results compiled by PricewaterhouseCoopers. First quarter 2000 eclipses the total reported for the entire year of 1998. 

The number of companies receiving venture capital funds (“deals” ) during the first quarter of 2000 rose to 1,423 – nearly double the 732 deals reported in the first quarter of 1999. The average size per deal increased 105 percent over a year ago to reach $12.1 million. 

Technology-related investments, including Internet-based companies, accounted for 93 percent or $16 billion of the total for the first quarter of 2000 – their highest share yet since the survey was first conducted. Internet companies have experienced the most rapid growth, capturing $10.8 billion during the latest quarter versus only $1.9 billion one year ago. The number of deals involving Internet-based firms tripled during the period to 750 in 2000. 



The accompanying table presents the Moneytree™ results for the first quarter of 2000 by state. No investments were reported in states omitted from the table. More detailed information by state, industry sector, stage of development and type of financing can be found on the PricewaterhouseCoopers website: http://204.198.129.80/index.asp 

National Venture Capital Association/Venture Economics Survey 

The National Venture Capital Association (NVCA) and Venture Economics found venture capitalists invested $22.7 billion into companies during the first quarter of 2000, compared to $6.2 billion in the first quarter of 1999 — representing a 266 percent increase.  

The number of companies receiving venture-backed financing also increased dramatically with 1,557 firms receiving financing in the first three months of 2000, compared to only 851 companies during the same time last year. 

The survey also found venture capitalists are focusing their investments on companies in earlier stages of their development. In the first quarter of 2000, 85.2 percent of all venture capital investments went to companies in the early or expansion stage. This is in contrast to 64.8 percent in the first quarter just a year ago. Expansion-stage companies overwhelmingly received the largest percentage of funding with 61.9 percent of all investments. 

State-by-state statistics are not readily available for the NVCA survey, but additional information can be found at: http://www.nvca.org/